Benedict, 85, who said he was standing down due to old age, will temporarily stay at the papal summer house at Castel Gandolfo near Rome.
During that time, the Mater Ecclesiae monastery building within the Vatican grounds -- an oasis of calm with its own vegetable garden and blooming flowerbeds -- will be renovated.
The Vatican said it expected his successor to be elected in time for Easter. It will be the first time in centuries that a pope and a former pope are alive at the same time.
"When the pope retires he will first move to Castel Gandolfo and then, when the restoration works are finished, he will move to the Vatican, to the monastery in the Vatican's gardens," spokesman Federico Lombardi said.
"I don't think he will be a recluse," Lombardi added.
"It's an unprecedented situation, we'll see how it goes... He has often said that he wanted to dedicate his old age to writing and study, and I imagine he will do so," Lombardi said.
The former monastery -- the only one within the Vatican's walls -- was built in 1992 after pope John Paul II said he wished to create a space to house those who dedicate their lives to contemplation.
Spread over three floors, the modern complex has 12 monastic cells upstairs, while the ground floor houses a kitchen, living room, library and chapel.
The cells are sparsely furnished: the only decorations to be seen are wooden crosses and a few paintings depicting scenes from religious life, according to the Vatican.
Benedict, a nature lover and a famously environmentally friendly pope who takes regular walks around the Vatican gardens, may spend his retirement days in the monastery flower garden, where two rare types of rose, the pink "Beatrice d'Este" and white "Giovanni Paolo II", are grown.
He will also have a role in what the future pope eats: peppers, tomatoes, courgettes and cabbages grown in the vegetable garden are traditionally served up in the pontiff's kitchen, as are the lemons and oranges grown on its trees.
A stone's throw from St. Peter's Basilica, the monastery has housed Benedictine nuns, Poor Clares -- an order founded by saints Clare of Assisi and Francis of Assisi -- and sisters from the order of the Visitation of Holy Mary, who moved out in November when the renovations began.